## Effective Annual Interest Rate

The total amount of interest earned or paid in a year on any financial products, loans etc. is called as the effective annual interest rate. The effective annual interest rate is also known as an effective interest rate.

So, how to calculate effective interest rate? Here is the formula: r = (1+i/n) n -1

r= effective interest rate   n = no. of periods   i= annual interest rate

Effective annual interest rate calculates while considering compound rates instead of static interest rates.

## Cash Receipts Journal

Cash receipts journal is a special type of ledger which records details of only cash receipts. This ledger reflects in the journal under the category “Cash Sales”.  Debit and credit both columns need to be recorded simultaneously. In debit side cash should be debited and in credit side sales need to be entered.

## Capital Budgeting

Capital Budgeting is a process which analyzes the frequency of return on long-term & short-term investments to be made by a business. Capital Budgeting is same as Investment appraisal.

Capital Budgeting is an important & complex task as the analysis needs to be accurate to determine the return value of investments.

## Carrying cost of Inventory

Carrying cost of Inventory or carry cost is the total cost of managing inventory. It includes tax, opportunity cost, salary, insurance, inventory hold cost etc.

## How to generate e-way bill on E-Way Bill portal?

E-Way bill is an electronically generated bill or receipt need to be generated for the purpose of transportation of goods worth more than Rs.50000 across the state.

## Break-even point

Break-even point is a point where a company faces a win-win situation; Means Company’s all debts are paid and gain no income. There is loss or profit at this point.  Break-even point is a term used in financial analysis. A company can have a lower or higher break-even point.

## 25th GST council meet updates

Yesterday on 18th January 2018 25th GST council meet held at Vigyan Bhavan chaired by finance minister Arun Jaitley. This meeting conducted to discuss some major issues of GST. Here are the outcomes of this meeting:

## Accounting Rate of Return

Accounting rate of return also called as Average rate return. Accounting rate return calculates the amount of profit company/entity incurred from the money invested. Accounting rate of return never considers the time value of money.

The formula to calculate accounting rate of return is: Average return during period / Average investment

Average Investment = Book value at the beginning of 1st year + Book value at the end of useful life /2

Average return during period = Profit after tax/ Life of investment

## Asset Turnover Ratio

Asset turnover ratio generally used to evaluate company’s performance in a financial year. Asset turnover ratio shows or indicates a company’s efficiency to generate revenues in the form of sales by using available assets.

## Accelerated Depreciation

Accelerated depreciation is a method to calculate the book value of a fixed asset over the years. In this method, the relative asset incurred higher expenses than last remaining years, unlike straight-line method.

There are two methods two calculate accelerated depreciation i.e. double declining balance method and Sum of the years’ digits method.

Double declining balance method formula

Annual Depreciation Expenses = Net Book Value x 2/Useful life in years

Sum of the years’ digits method formula

Depreciation Expense = Remaining useful life of asset / Sum of the years digits x Depreciable Cost

## Top reasons of start-up failure and how to overcome it?

Every year new start-up’s join the business industry with creative ideas and with a hope to establish themselves as business giants but some fail in achieving this goal.

## Accounts Receivable Turnover Ratio

Accounts receivable turnover ratio defines the efficiency and capacity of a business entity in collecting its payments on the credits it rendered.